Divers for the popular Uber car service filed a class action complaint against Uber Technologies, Inc. alleging that Uber misclassifies its drivers as independent contractors resulting in the illegal withholding of the drivers’ funds. Uber provides car services in cities throughout the country via an on demand dispatch system where drivers are hailed and dispatched through a mobile phone application.
The drivers claim that Uber failed to pay their business expenses and the total proceeds owed from customer gratuities. Under California law, employers must reimburse their employees for work expenses that benefit their employer and are necessary for employees to perform their jobs. Uber does not reimburse its estimated 163,000 drivers for costs such as vehicle maintenance and gas. Additionally, the drivers only receive a portion of passenger gratuities. Uber explicitly markets that there is no need to tip their drivers because tip is included in payment.
The California Supreme Court applies the “economic realities” test, in which the most significant factor determining whether a worker is an independent contractor or employee is whether the person to whom service is rendered has control or the right to control the worker both as to the work done and the manner and means in which it is performed; however, this determination depends upon a number of factors, all of which must be considered, and none of which is controlling by itself. Such factors include the extent to which the work performed is an integral part of the employer’s business, whether the worker’s managerial skills affect his or her opportunity for profit and loss, and the relative investments in facilities and equipment by the worker and the employer.
Nationally, there is a growing trend of employers falsely classifying their workers as independent contractors to avoid payroll taxes, the minimum wage or overtime laws, and other wage and hour requirements such as meal and rest breaks, and business expense reimbursements. Additionally, employers do not have to cover independent contractors under workers’ compensation insurance, and are not liable for payments under unemployment insurance, disability insurance, or social security.
This phenomenon is not limited to taxi drivers but includes construction workers, restaurant workers, truck drivers, office technicians, and salon workers. According to Robert Reich, Chancellor’s Professor of Public Policy at the University of California and former Secretary of Labor under President Clinton, “The rise of ‘independent contractors’ is the most significant legal trend in the American workforce—contributing directly to low pay, irregular hours, and job insecurity. What makes them ‘independent contractors’ is the [sic] mainly that the companies they work for say they are.”
Once one company in an industry decides to treat its employees as independent contractors, other companies race to the bottom to increase their competitiveness to the detriment of workers.
Workers who perform a business’s essential work are, for all intents and purposes, employees and should reap the protective benefits of it. If an employer-employee relationship exists—regardless of what the employer calls the relationship is—a worker is not an independent contractor.
If you believe your employer has violated your rights by misclassifying you as an independent contractor rather than an employee, please contact The Harman Firm, LLP.